| We often hear from taxpayers that e-filing a return is | | | | means you are more likely to be audited? Taxpayers |
| a bad idea as you are feeding the IRS with a silver | | | | opposing the e-file "haters" believe that the way you |
| spoon all your tax data, and makes it extremely easy | | | | use to file your return does not impact the audit |
| for the agency to audit your return. The logic is simple | | | | selection process as this process is done after the |
| and clear, when you e-file your tax return, you submit | | | | data is entered regardless of the way it was |
| your income tax information to the IRS using their | | | | submitted (e-file or mailed in). E-file supporters think that |
| software and allowing them to quickly analyze your | | | | the IRS chooses returns for audit or examination |
| return for statistics, averages, deviations from IRS | | | | based on analysis of your income, deductions and |
| guidelines (i.e. for example high donation expenses with | | | | credits as they appear on your return, thus "making it |
| less than average income) thus making it much easier | | | | easy" for the IRS to process a return does not |
| for the IRS to audit your return first. | | | | increase the audit risk. Taking it further, some claim that |
| If you support that approach, you prefer mailing your | | | | e-filing actually reduces your audit risk, since the e-filing |
| hard copy tax return to the IRS requiring them to open | | | | process minimizes errors in filing. Using the e-file |
| the return, key in all the data and only then analyze the | | | | system, taxpayer goes through the check and |
| return, searching for irregular items. Reporting your | | | | balances of the software before submitting the return, |
| income, deductions and credits to the IRS and the | | | | while mailing hard copy does not go through the same |
| state is mandatory by law, but the law does not | | | | process. The IRS says e-filed returns have 1% errors |
| "force" you to make it easy for the IRS to audit you. | | | | versus 20% errors in non-efiled returns. Makes sense? |
| But is that really the case? is e-filing your return really | | | | Maybe. |